Q&A: Tony Fadell, CEO of Nest, on making home products cool

Nest Labs' first product has made it the darling of both the cleantech industry and design crowd. It's a cool-looking, some would even say sexy, thermostat that remembers the temperatures you like and comes with a mobile app for your smartphone.

The Nest Learning Thermostat retails for $249 and is so popular there's a gray market for them abroad, though Nest has declined to reveal how many units it has shipped. This month, Nest introduced Nest Protect, a $129 smoke and carbon monoxide detector, that goes on sale in November.

The venture-backed startup has more than 280 employees and is rapidly hiring. More than half of Nest's employees previously worked at Apple (AAPL), including co-founder and CEO Tony Fadell. The Mercury News recently interviewed Fadell at Nest's offices in Palo Alto; the interview has been edited for length and clarity.

Q: How do you imagine sales will roll out for Nest Protect, the smoke and carbon monoxide detector? Do you think the same people who bought the Nest Thermostat are likely to buy this, or is it a totally different market segment?

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A: We can see both. We can see from our pre-orders how many are previous Nest customers as well as new ones with unique IP addresses that we've never seen before. Nest Thermostat owners like the carbon monoxide link. If Nest Protect's carbon monoxide alarm goes off, the Nest Thermostat automatically turns off the gas furnace. The No.1 carbon monoxide leak in the home is a faulty gas furnace, so a lot of people like that functionality. It's very similar to our Apple days: They started with a small iPod and they grew up into the Apple line over time, and they went all the way up to the Mac. Because Nest Protect is $129, it's a more accessible price point. They can buy into the Nest brand and find out what we're all about without going for the thermostat first and foremost. It's always nice to have a palette of products to be able to offer to people.

Q: Utilities have had this idea that the best way to drive energy efficiency was to change consumer behavior. Is it your view that people just want a good product?

A: Absolutely. At the end of the day people want to do the right thing, but they don't have the time. Everybody is stretched for time. They want to spend more time with their family. Why can't a product learn from you? That's why the Nest Learning Thermostat was invented. It learns from you. It's like having an assistant: You tell your assistant "I like this, I like that," and then it does it for you. Then you don't have to change your thermostat 1,500 times a year. You literally change your thermostat three to five times a day.

Q: Is there something specific that you are trying to build at Nest in terms of a corporate culture?

A: You can't prescribe these things. You don't see anything on the walls where we are writing down our mantra. It's not about going through some indoctrination class and rah rah rah, and then everyone forgets it. You have to be a model example. It's being engaged with each individual and each team, and explaining what we want and what we're trying to achieve for the customer. Learning by doing is the only way I know how to learn.

Q: Nest has a lot of buzz in both the design world and the cleantech community. What do you see as the big driver of the product's success at this point?

A: You have to look at why people come and work at Nest. Part of it is that a lot of people here already know each other, but we're also on a mission with a purpose. People are personally motivated by energy or safety. Those things are why we can steal people away from the biggest brands in the valley. This is a chance for people to work with a team that led the iPod and the iPhone. It's not just a startup with 20-somethings: We have seasoned talent from Fortune 500 companies as well as young talent, and we can blend all that together. People are like, "Wow, I want to be a part of that."

Q: You're selling the Nest Thermostat and Nest Protect in the United States and Canada. Anywhere else?

A: The thermostat is in the United States and Canada, and for the Nest Protect we're pre-ordering in the U.S., Canada and the U.K. It will also ship to nine other countries in Europe; it's a U.K. model but it will ship to nine other countries. We're expanding both the product lines and the regions that we cover, and we are continually expanding our retailers. There's massive growth. We're breathless.

Q: How many units a month are you shipping?

A: We're not saying that, but we are crushing the numbers. Our growth year over year is well over 100 percent. Even quarter to quarter.

Q: I live in Oakland, where the crime rate is very high. Have you guys thought at all about doing a burglar alarm?

A: We look at it all the time. The possibilities are endless, but unfortunately our resources aren't. We did two versions of the thermostat, we've got energy services partnerships with utilities, we just came out with Nest Protect, and this was all in less than two years. I think we're running at an incredible pace. We have to prove ourselves with each product and make sure that it is an incredible success before we move on. Nest Protect may seem simple, but it's actually incredibly hard to do. People are like, "Oh, this is like your second album." No, it's like we just did a hit movie, and then we did a hit album. When people say, "When are you going to do X, or Y, or Z," we'd love to. We'll get there.

Contact Dana Hull at 408-920-2706. Follow her at Twitter.com/danahull.

Tony Fadell

Age: 44Previous jobs: Built the Mobile Computing Group at Philips Electronics; led the team that created the first 18 generations of the iPod and the first three generations of the iPhone at AppleEducation: University of Michigan, bachelor's in computer engineeringFamily: He and his wife have two children, ages 5 and 6Residence: Woodside

FIVE THINGS ABOUT TONY FADELL

1. His father was a salesman for Levi's.2. He attended 12 schools in 15 years and learns by doing.3. He got the idea for reinventing the thermostat while building an energy-efficient home in Lake Tahoe.4. His first recruit, and Nest's co-founder, is Matt Rogers, who was Fadell's first intern at Apple.5. His Twitter handle is @tfadell